Swiggy vs Zomato: The Battle for Your Next Meal - Who Are You Choosing?

The Indian food delivery market operates as a duopoly, primarily dominated by two major players: Zomato and Swiggy.

Both platforms provide similar services and cater to millions of consumers seeking the convenience of online food ordering.

In typical duopoly fashion, when one company introduces a new feature or promotional offer, the other often responds in kind, creating a competitive yet balanced dynamic in the market.

However, the competition between Zomato and Swiggy is not always symmetrical. For example, Zomato made significant strides by launching its Zomato Pro subscription service, which offers discounts and exclusive deals to users.

In response, Swiggy introduced its own version, Swiggy One, to retain its customer base. Despite these initiatives, both platforms have struggled with profitability, as heavy discounting and high customer acquisition costs impact their margins.

Recently, the demand for online food delivery has increased, driven by rising smartphone penetration and changing consumer habits, allowing both Zomato and Swiggy to scale rapidly.

However, they also face pressure from smaller, emerging competitors and shifting regulatory dynamics.

This competitive landscape has prompted both platforms to diversify their offerings, with Swiggy expanding into grocery delivery and Zomato focusing on cloud kitchens.

As the duopoly between Zomato and Swiggy continues to evolve, the growing market share of these two players presents both opportunities and challenges for the industry.

Let's delve deeper into how this competition plays out, and what it means for the future of food delivery in India.

About Zomato

Zomato Limited, founded in 2008, has emerged as a leading player in India's online food delivery and restaurant discovery market.

By FY24, it had solidified its position as a market leader, serving millions of customers in India and internationally.

Zomato provides a seamless platform for food delivery, restaurant reservations, reviews, cloud kitchens, and quick commerce (Q-Commerce), catering to a wide range of dining needs.

The company has expanded beyond India, establishing a presence in the Middle East, Southeast Asia, and the United States, backed by a vast network of delivery partners and restaurants.

Zomato also leads in the cloud kitchen space through its Zomato Kitchen initiative, which allows restaurant brands to reach customers without requiring physical outlets.

Through strategic acquisitions and partnerships, Zomato continues to strengthen its position in the competitive food-tech sector.

About Swiggy

Founded in 2014, Swiggy has quickly established itself as one of India's leading online food delivery platforms, recognized for its speed, convenience, and customer service.

Swiggy has evolved into a comprehensive food-tech company, expanding its offerings to include services such as Swiggy Instamart (grocery delivery), Swiggy Genie (pickup/drop-off services), and Swiggy Dineout (restaurant reservations).

Swiggy provides diverse range of options from local eateries to major chains, all delivered with an emphasis on speed and quality.

The company operates a strong logistics network, which includes warehouses and delivery partners, to ensure timely deliveries.

Additionally, Swiggy has taken the lead in the dark kitchen sector, partnering with restaurant brands to provide delivery-only services.

Its Swiggy One subscription model enhances user loyalty, while the introduction of Swiggy Instamart addresses the increasing demand for grocery delivery.

Through continuous innovation and strategic expansion, Swiggy is positioning itself for long-term growth in a competitive market.

Two Paths, One Goal: A Look at Their Differing Strategies

Zomato and Swiggy are India's leading food delivery platforms, each with distinct business strategies.

Zomato started as a restaurant discovery service and later expanded into food delivery, cloud kitchens, and restaurant subscriptions through Zomato Pro.

In contrast, Swiggy initially focused on food delivery but has since diversified into grocery delivery with Instamart, local errands through Swiggy Genie, and quick commerce.

Zomato generates its revenue primarily from delivery commissions, restaurant advertising, and Zomato Pro subscriptions, while also placing an increasing emphasis on cloud kitchens.

Swiggy, on the other hand, earns income from food delivery, grocery services, and its Swiggy One subscription, which provides combined benefits for food and grocery purchases.

When it comes to logistics, Zomato emphasizes partnerships with restaurants and tech-driven food delivery, whereas Swiggy prioritizes speed, aiming to deliver food, groceries, and local services quickly. This focus on swift service gives Swiggy an advantage in quick commerce.

Zomato Pro offers dining discounts, while Swiggy One caters to users looking for convenience across multiple services.

Geographically, Zomato primarily targets tier-1 cities and high-end dining experiences, while Swiggy has expanded its reach into tier-2 cities, thereby serving a broader audience.

Zomato's growth strategy includes international expansion and a public listing.

In contrast, Swiggy, which is still privately funded, is focused on scaling its offerings across food, grocery, and local services.

While Zomato excels in food discovery, Swiggy's diversified offerings position it as a more comprehensive platform.

Financial Performance

Swiggy and Zomato have shown significant revenue growth over the past three years. Swiggy's revenue grew by 42.4% in FY23 and 33.5% in FY24, reaching Rs 116.34 bn by FY24.

Zomato, however, reported a more impressive growth trajectory, with revenue rising 68.9% in FY23 and 71.1% in FY24, crossing Rs 121.14 bn by FY24.

While both companies have struggled at the net profit level, Swiggy's losses have narrowed, from Rs 36.29 bn in FY22 to Rs 23.50 bn in FY24, reflecting a 43.8% decline in losses in FY24.

Zomato, on the other hand, saw a significant improvement, moving from a loss of Rs 12.2 bn in FY22 to a positive Rs 3.51 bn in FY24, a dramatic recovery.

Here is the table showing financial performance of both the food delivery giants.

Financial Comparison (2022-24)

Particulars	31-Mar-22	31-Mar-23	31-Mar-24
Revenues (Rs in m)
Swiggy	61,197	87,144	116,343
Change (%)	NA	42.40%	33.50%
Zomato	41,920	70,790	1,21,140
Change (%)	110.00%	68.90%	71.10%
Net Profit (Rs in m)
Swiggy	-36,289	-41,793	-23,502
Change (%)	NA	15.20%	-43.80%
Zomato	-12,220	-9,710	3,510
Change (%)	49.80%	-20.50%	-136.10%

Market Share: Swiggy vs Zomato

Swiggy, which held a dominant market share of 61.2% in 2018, has experienced a steady decline over the years.

By 2023, Swiggy's share had dropped to 34%. This consistent downward trend suggests that while Swiggy has continued to grow in absolute revenue terms, it has lost relative market share, likely due to increasing competition, particularly from Zomato, and the evolution of the food delivery market.

Swiggy's push into areas like quick commerce (Instamart) and grocery delivery could have diverted focus from its core food delivery operations, impacting its market share in the process.

On the other hand, Zomato has demonstrated remarkable growth in market share, rising from 38.8% in 2018 to 58% in 2023.

This gain is indicative of Zomato's ability to capture more of the food delivery market through strategic initiatives such as Zomato Pro (its subscription service), greater restaurant partnerships, and a stronger brand presence.

Swiggy vs Zomato: Relative Market Share

	CY18	CY19	CY20	CY21	CY22	CY23
Swiggy (%)	61.20%	55.20%	50.40%	47%	45%	34%
Zomato (%)	38.80%	44.80%	49.60%	53%	55%	58%

Source: J M Financial

Zomato's higher investments in marketing, customer loyalty programs, and its efforts to diversify into new areas (like Hyperpure) have likely helped increase its consumer base, leading to steady gains in market share.

Key Performance Indicators

Below is the table showing key performance indicators of both the competitor, helping us evaluate the performance more from an operational perspective.

Swiggy vs Zomato: Key Metrics

Metric	Zomato (FY24)	Swiggy (FY24)
ARPU	Rs 98 Approx	Rs 85 Approx
GMV (Rs in m)	150	117
GOV (Rs in m)	32,224	24,700
AOV	Rs 428	Rs 428
MTUs (Rs in m)	18.4	12.7
Restaurants Partners	2,47,000	1,96,000
Cities Present in	700+	653
CAC	Rs 500 - 600 Approx	Rs 400 - 500 Approx

Source: Annual Report, Red Herring Prospectus and Company Report

In FY24, Zomato outperforms Swiggy in key metrics, with a higher Average Revenue Per User (ARPU) of (Rs 98 vs Rs 85), Gross Merchandise Value (GMV) of (Rs 150 m vs Rs 117 m), and Gross Order Value (GOV) of (32,224 m vs 24,700 m), reflecting stronger revenue generation and higher order value.

Zomato also leads in MTUs (Monthly Transacting Users) of (18.4 m vs 12.7 m) and has a larger network of restaurant partners (247,000 vs 196,000), along with a broader geographic presence in 700+ cities compared to Swiggy's 653.

However, Swiggy is more efficient in customer acquisition, with a lower Customer Acquisition Cost (CAC) of (Rs 400-500 vs Rs 500-600). While Zomato holds the advantage in revenue and market penetration, Swiggy remains more cost-effective in acquiring new users.

From this data, we see Zomato generates more revenue per user and handles higher transaction volumes, but at the cost of higher customer acquisition.

Swiggy, on the other hand, is more efficient in acquiring customers though it generates slightly less revenue per user.

Essentially, Zomato is focusing on extracting more value from each customer, while Swiggy emphasises cost-efficiency in growing its user base. Both approaches have their merits depending on whether growth or profitability is the priority.

Which is the Better Investment?

Zomato and Swiggy are two of India's biggest food-tech players, each with a distinct approach. Zomato, originally a restaurant discovery platform, has evolved into a dominant force in food delivery, cloud kitchens, and subscriptions like Zomato Pro.

Its focus on high-margin services, such as restaurant advertising and cloud kitchens, has fuelled consistent revenue growth and improved profitability, despite competition.

Zomato's strong brand presence and large customer base, position it for long-term success.

Swiggy, while aggressive in diversifying into quick commerce with services like Instamart (grocery) and Genie (local errands), faces a heavier investment load.

While its revenue growth is notable, Swiggy's broader service offering has yet to yield profitability at the same scale as Zomato. The company's focus on expansion and logistics has led to narrowing losses, but profitability remains a challenge.

In comparison, Zomato's ability to leverage its restaurant network, achieve operational efficiencies, and scale profitable businesses gives it a more sustainable edge.

Its clear path to profitability and steady growth make Zomato the more compelling choice for long-term investors, with a stronger focus on core food delivery and high-margin services.

Conclusion

In the fast-evolving food delivery market, both Zomato and Swiggy have cemented their leadership positions, each with unique strengths.

Zomato leads in market share and revenue growth, with a wider reach in terms of restaurant partners and a larger user base.

However, Swiggy, with its aggressive expansion into quick commerce and higher efficiency in customer acquisition, remains a strong contender.

Both companies have demonstrated resilience, but profitability remains a challenge for both, with net losses still prevalent.

As the market continues to grow, driven by shifting consumer preferences and the rise of online food ordering, both players are well-positioned to benefit.

However, investors should be mindful of the competitive pressures and evolving business models that could impact future performance.

Always conduct thorough research and assess your investment goals and risk tolerance before making any decisions in this dynamic sector.

Happy Investing!

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